2013State of Governance

Need for New Technology

I was all set to write a routine article on agriculture and started collecting data on whether Gujarat farmers were better, or were farmers in Madhya Pradesh (MP) more productive; I was all set to analyse the State-wise agricultural data to prepare a metric for analysing State-wise comparative performances of farmers/farms. But what continued to torment me was that hairline gaps in the supply chain model have since developed into massive cracks and impoverished farmers continue to commit suicide. This has not abated since 1997 in Andhra Pradesh and, in fact, has spread to other States where commercial agriculture had stabilised long back. This made me think deeply about the problems confronting farms, farmers and the agriculture sector on the whole.

It is easy to blame the economic reform processes for this, which the Leftists had targeted since 1992. Are these only supply-side issues, or are there demand-side problems too? Is it possible that technologies that enabled the Green Revolution and three generations of seed scientists, agronomists and chemical engineers to stave off hunger in India and China, have been lulled into a cocoon of success, and the new-age technologies that worked so well since the 1940s, are in a disarray and disorder.

Ranking State Performance in Agriculture

We possibly may have to move on and consider radical shifts in technology to be able to ensure food security in the near future, as the population continues to explode. A comparative picture of agriculture in various States reveals that performances of the top States have fallen and States like MP, Gujarat, Chhattisgarh and Odisha are doing better. MP takes the first position due to excellent pro-farmer policies, investments in critical rural infrastructure and, despite deficiencies, by concentrating on agricultural growth. Rajasthan is second, but could land into problems as it is mining fossil waters. Karnataka is in third position due to excellent strides in watershed development, rainwater harvesting and all-round support for farmers. All other States which have managed to achieve average annual growth rates in agriculture above 4.2 per cent (the Planning Commission target for the agriculture sector in the 11th Plan), such as Assam, Gujarat, Andhra Pradesh (AP) and Bihar deserve praise for good governance practices and the hard-working farmers, who are assisted and not ruthlessly exploited.

Considering the price of crude oil today, we have to opt for technologies which do not depend on nitrate fertilisers based on fossil fuels, huge water inputs and involving costly credit resources

But AP is in trouble as farmers are not able to benefit from massive fertiliser doses. Sustainable farming practices, rainwater harvesting, localised seed production, credit subsidies directly to farmers, warehouses, roads and market-yards, all play a significant role. What worries most are the poor growth rates in Punjab and Maharashtra, which are far below the national average. The State governments here need to emulate Chhattisgarh and Odisha in creating an ideal environment for farmers to enhance productivity. The role of agricultural universities and the KVKs in releasing new seeds and technologies also has to be factored into the growth stories of each State.

What was the Green Revolution?

In 1970, the Nobel Peace Prize was awarded to Dr Norman Borlaug, an American scientist, rightly termed as the Father of the Green Revolution. Working in Mexico in the 1940s, he did not get any encouragement in the USA. He developed new disease-resistant and high-yielding varieties of dwarf wheat which, combined with new mechanised agricultural technologies, enabled Mexico to harvest record yields of wheat. Mexico, which like the USA used to import 50 per cent of its wheat, started exporting it in the 1960s and the Mexican-based technology success story spread far and wide. The USA too benefited and became self-sufficient in wheat in the 1950s and a major exporter of wheat by the 1960s.

The Ford and Rockefeller foundations and the government agencies around the world funded further research in Dr Borlaug’s pioneering work and the CIMMYT was set up in Mexico in 1963. The researchers, led by Dr Borlaug, also launched the Green Revolution in India. Funds given by the Ford Foundation and the personal initiative of Dr Borlaug helped in developing the IR8 variety of dwarf paddy that produced more grain per plant when grown with irrigation facilities and high dosage of fertilisers. The IR8 paddy variety spread all over Asia and variants have helped China and India and other Asian countries to feed their hungry millions and take them off perpetual poverty to relative prosperity. Today, India exports rice and is one of the leading exporters of basmati rice.

The Chinese debacle in 1962, The Indo-Pakistan war in 1965 and the disastrous droughts in 1964 and 1965 forced the devaluation of the rupee in 1966, and India had to beg for PL-480 food aid from the USA, which came with strings attached. Most Indians are not aware that the PL-480 shipments started from 1955 and continued till 1971, when President Nixon with his infamous gunboat diplomacy tried to come to the aid of Pakistan. But India survived as a nation in the 1960s thanks to the poor quality wheat and maize made available due to the generosity of President Eisenhower and the American people. Somehow, Indians tend to downgrade the strong support given by Republican Presidents and that is possibly the legacy of Robert McNamara of the World Bank and the Ambassadors J K Galbraith and Daniel Moynihan. A portion of the entire PL-480 food repayments (totalling US$3.1 billion) were used to build up ICAR research institutions and many agricultural universities, which have served India well and enabled us to be self-sufficient in food.

Today, at least three generations of farmers are hooked onto chemical fertilisers and have forgotten about age-old agricultural practices using green manures and even organic fertilisers

A cheque of US$2.2 billion was symbolically handed over by Daniel Moynihan, then Ambassador to India, and we could build up our agri-research systems. But, what happened to the remaining US$1.1 billion? Thereby hangs a tale. Part of it was used to set up the Indian arms of Prentice-Hall, Wiley Eastern, Allied East & West, McGraw Hill and ELBS from UK – that is how generations of Indian students were able to get the best of college textbooks at 20 per cent of the prices paid by their American and British counterparts. So, when Leftist tendencies tend to boil over, our students need to reflect on the innate generosity and spirit of the Americans in sharing knowledge. Another component of the PL-480 was used to purchase over 3,50,000 Indian books in various Indian languages and the Library of Congress, and some like University of Berkeley, Duke University and Harvard University – that set up centres of South Asian studies – possess the richest collections of books from India and Tibet (8th to 20th century).

Without detracting from the accolades heaped on Dr Borlaug, whose pioneering research enabled hundreds of million in impoverished countries in Asia, Africa, South America to grow their own food, we need to seriously consider alternate paths as times and priorities have changed and all countries are facing economic problems. Technology fatigue also seems to have set in and we all have to move on. Considering the price of crude oil per barrel today, we have to try and opt for technologies which do not depend on nitrate fertilisers based on fossil fuels, huge water inputs, costly HYV seeds modified for high-dosage fertilisers, and, above all, involving costly credit resources.

Critical Review of the Green Revolution Technologies

Let us face facts. The Green Revolution Technology is now over 60-70 years old and while we may continue to heap praise for the technologies unleashed by Dr Borlaug, we need to remember that these technologies were for a different era when oil was less than US$3 per barrel and the agricultural inputs were available at cheaper costs. The high-yielding varieties were domesticated plants bred specifically to respond to chemical fertilisers and that produced an incredible amount of grain per acre planted. After selective breeding of the plants, the seed scientists evolved the characteristics of larger seeds which created more grain yields and heavier above ground weight, which was very important as it led to increased photosynthate allocation. By maximising the seed or food portion of the plant, these HYV plants were able to use solar-induced photosynthesis processes as the solar energy available was used directly to boost the food portion of the plant. Further selective breeding of plants that were not sensitive to day length (solar exposure) by scientists, enabled doubling of crop production. Water-soluble fertilisers also made the Green Revolution possible, but they forever altered agricultural practices, and these nitrate fertilisers are the culprits today.

Today, at least three generations of farmers are hooked onto chemical fertilisers and have forgotten about age-old agricultural practices using dhaincha, or green manures, and even organic fertilisers like cow-dung, etc. The HYV seeds, which have been developed since the 1960s, cannot grow without the help of nitrogen fertilisers. Irrigation is as important now as earlier, and agriculture is limited to areas with good rainfall or assured water and quality soil availability due to the monsoons. To address the need for irrigation, steps were taken to store water in dams, tanks, and pumped from underground acquifers. Thus, major, medium and minor irrigation sources were developed using wasteful diesel pumps, and electric pumps, which were operationally cheaper, were ignored. Water was dragged by canals over long distances to drier areas and enabled more land to be used for optimum agricultural production, thus increasing crop yields all over the country. In India, all States started improving agricultural production systems and huge agricultural surplus yields became possible. But, the oil prices around US$100 per barrel today, impacts nitrate fertiliser costs and diesel oil costs adversely. Today, our technology needs change and fast.

Traditionally, the grain-surplus States were Punjab, Haryana, Western UP and AP, and grain warehouses were built there by the FCI, CWC and State Warehousing Corporations. The optimum buffer stock of foodgrains required was 35 million tones, but today 80 million tonnes of buffer stock grains are purchased due to the leaps in agricultural productivity. The politically fixed prices of paddy and wheat and the apathy for minor millets ensures that even farmers do not eat jowar, bajra, nachni and ragi anymore. With no planning for warehouses, this explosion in buffer foodstocks leads to 30 per cent of the stored grain (much of it in the open) rotting in open silos, or is destroyed by rats. This is a crying waste, especially as many of the 480 million people still go to hungry and millions of tonnes of grains rot due to lack of planning.

Excessive Use of Fertilisers, Water

Recently, a five-year-long study, commissioned by the Agriculture Department in Maharashtra and conducted by the Gokhale Institute of Politics and Economics, Pune, brought some inconvenient truths to light. Most soils in Maharashtra had poor humus and nutrient content due to natural decline and mono-cropping pattern of farming a single HYV crop. The poor soil quality increased farmers’ dependence on fertiliser usage. Also, over-use of water created soil salinity and water-logging due to poor drainage systems. Soils were over 60 per cent deficient in micro-nutrients, but overuse of fertilisers contaminated the groundwater and reduced both crop quality and yield. Excess water use led to excess salinity and this also affected crop quality by reducing overall primary metabolites like amino-acids, sugar, etc. The end-product in food is thus, less nutritious. This underwrites the need for all farmers to get the soil health of their farms tested every year, as also the quality of water being used for agriculture. This would enable the State to build up soil fertility indices on a village-wise basis and this will be a boon for small farmers. As micro-nutrient testing is costly, all States may consider undertaking micro-nutrient testing on a village-wise basis, especially for the small farmers.

Why this Nitrogen Fixation?

Ever since settled agriculture started over 10,000 years back, farmers realised the value of good quality seeds, water usage and crop husbandry techniques for boosting crop yields. Three very important scientific principles made this possible. They are:

  • The photosynthesis process using solar energy
  • Absorbing nitrogen from the soil
  • Ability to draw water from the soil through roots by osmotic pressure.

The largest component in air is nitrogen, but plants cannot absorb it directly and instead depend on nitrogen from the soil. Hence, there’s the need for water-soluble nitrates. Only legumes like peas, beans, lentils have a method of absorbing nitrogen from air through nitrogen-fixing bacteria. Also, nitrogen and nitrates occur naturally, but cause no harm to humans. But, in their haste to garner massive profits, farmers applied high concentrations of nitrogen from synthetic fertilisers to crops, resulting in nitrate pollution. A study in Punjab by Greenpeace India in November 2009 revealed that an average application of 320 kg of nitrogen per hectare (higher than the average rate of 210 kg per hectare as per the Fertiliser Association of India), contaminated the groundwater – even drinking water – and is the cause for high rates of cancer. Overuse of fertilisers is prevalent in Punjab, Haryana, UP and coastal areas.

Indiscriminate use of nitrogen-based fertilisers pollutes the air and water resources, and is estimated to have caused damage of US$60-280 billion annually in Europe alone. Professor Edward Cocking, Director of the Center for Crop Nitrogen Fixation, University of Nottingham, and his team have developed a unique method of doing away with nitrogen fertilisers by putting nitrogen-fixing bacteria into the cells of plant roots. A specific strain of nitrogen-fixing bacteria, discovered by Dr Cocking, can intra-cellularly colonise all major crop plants. This enables every plant cell to fix atmospheric nitrogen and could be used for all nitrogen needs of crops. This could mean goodbye to costly nitrate-based water-soluble fertilisers.

A specific strain of nitrogen-fixing bacteria can intra-cellularly colonise all major crop plants. This enables every plant cell to fix atmospheric nitrogen. This could mean goodbye to costly nitrate-based water-soluble fertilisers

The ‘N-Fix’ is neither a genetic modification, nor does it involve bio-engineering. Regulatory permissions and field trials are being planned in the UK, Europe, Canada and Brazil, and the technology is expected to be available in the next 2-3 years. This will drastically reducing farm costs which went up post the Green Revolution.

Cost Implications

The cost implications for Indian agriculture are enormous and this technology may be made open-source and freely available in India to boost organic farming. It will reduce farming costs drastically as the farmer does not need to pump up groundwater using diesel pump-sets (from depths of 50-1000 ft), need not purchase HYV seeds as he can retain his best seeds and coat these with the nitrogen-fixing bacteria, and does not need to put much water (for water soluble fertilisers) as the nitrogen-fixing bacteria will be able to absorb atmospheric nitrogen. This will help enhance food security and stop further poisoning of food due to indiscriminate use of fertilisers, pesticides and hormones. But the greatest benefit to all mankind will be stopping of production of chemical fertilisers if this technology stabilises.

Using N-Fix technology and SRI techniques as adopted for use in India, our farmers, who are adept in pre-industrial agricultural practices, would be able to enhance crop production and productivity immensely as irrigation costs would be minimised by 40 per cent, while output would be enhanced at least by 20-25 per cent. The only fear is that oil cartels and their all-powerful lobbies may wreck this initiative which can revive our agriculture.

Access to Affordable Credit for Agriculture

On the frail shoulders of the Indian farmer rest the country’s hopes for economic revival. There’s a delayed or poor monsoon, and the distress of farmers is all too evident with some suicides and a horde of farmers abandoning their rural homes for an urban livelihood and the doubtful security of urban slums! Today, economic growth cannot be restricted to industries and services sectors alone as it is the country’s rural economy that feeds and sustains the people besides ensuring our march to prosperity. With rising oil prices, farmers are faced with a three-fold increase in input costs. This is due to non-availability of information, poor storage and marketing facilities as also poor communication, lack of transportation and poor collective bargaining power. With small land holdings, it is increasingly difficult to ensure better financial margins, especially for the small farmer.

Many Left-oriented economists believe that the LPG (liberalisation, privatisation, globalisation) policies post-1992, have succeeded in proliferation of urban slums due to encouragement to builder lobbies, who have increased land prices and reduced farmers to near penury, forcing them to commit suicide.

There are other major problems to ponder upon: Do we have the technologies to ensure that on small farms with land holdings less than 1 hectare, a farmer is able to support his family, given that assured sources of irrigation are lacking in 55 per cent of farmlands in the country? How do we ensure appropriate support systems for the farmer to boost production, such as affordable credit availability on time, essential and quality inputs and insurance, marketability besides storage, transportation, etc? There is an infrastructure in place for delivery of financial services. What is required now is finding ways and means to improve the existing rural credit delivery mechanisms and evolving new models for extending outreach in far-flung rural areas. Credit has to be an integral part of an agricultural programme. And, it must go hand-in-hand with efforts to improve farm productivity. This requires cooperation among all stakeholders, convergence of efforts of the banking system and various government departments.

To achieve this, it is essential to make rural financial outlets more pro-poor and farmer-friendly. The attitude of the people managing these branches plays a key role in re-defining the rural banker-borrower relationship into a successful working model, as was done in Korea in the mid-1960s for their cooperative banking model. Today, just providing credit or micro-credit may not help the poor to escape the clutches of poverty. Proper guidance to the borrowers, an appropriate technical assistance, and, at times, even financial support – all these put together in a package – would be required for the rural clients of banks. Having more touch-points, either in the form of branches or BCs, is another factor which needs to be addressed to enable smoother and faster credit flow. New private sector banks are not the answer to financial inclusion.

Moreover, rural banking procedures need to be simplified. UID/Aadhar should ensure that KYC norms make rural banking easier. Product innovations to suit the rural/urban poor and enable them make productive use of credit, would play a key role. Bankers need to consider more products for the poorer micro-segments in our rural society. One loan product does not meet all rural requirements for farmer clients! Technology today influences every part of rural life, and banking with the poor certainly needs better technology to reduce transaction costs for rural clients and banks both. This also enables the banks to scale-up operations and service more farmers at a lesser cost. These are demand-side issues of the farmer.

Bankers’ agri-credit issues

If farmers tend to blame bankers for their inability to secure crop/term loans or even consumption credit, bankers too have serious and very fundamental agri-credit issues. As per agricultural lending fundamentals, prior to sanctioning agricultural loans, bankers should have data-sheets on a farmer-wise basis, containing the following:

  1. Prior production history
  2. Personal and business credit history
  3. Financial records – balance sheets, inventories, income projections, tax returns
  4. Farming/business/marketing plans
  5. Repayment of loans based on:
  • Production or management plan
  • Marketing plan
  • Projected cash flow
  • Collateral and equity
  • Off-farm income streams

The Indian farmer is unable to provide any of these documents as he is often illiterate, has small land holding and is able to secure crop loans only against hypothecation of standing crops, which is no security for the banker. The banker is also unable to mortgage farmland, as land titles continue to be in a mess with land records not being 100 per cent computerised. In the North-East, all land is tribal property and cannot be mortgaged as bank security. In all other countries, bankers are able to lend as per banking laws, norms and practices. But in India, this is not so. A banker has to assess the cash flow, capital or capital assets, collateral, conditions specific to the loan and, character of the borrower and his relationship with the bank before sanctioning any loan.

Based on available financial data, the banker calculates ‘Sweet Sixteen’ ratios to assess the borrower’s repayment capacity from the project being funded by the bank.

  1. Liquidity – cash flow to assess repaying capacity
  2. Solvency – capital invested as equity investment in enterprise
  3. Profitability – collaterals offered to bank as security for the loan
  4. Repayment ability – risks assessment, weather cycle and economic macro-picture
  5. Financial efficiency – assessment of success of enterprise

Every banker would wish that farmers prosper, prepare their financial statements and secure loans for commercial farming. In the absence of reliable operating data, bankers tend to take the easy way out and sanction crop loans to farmers to meet their 18 per cent agri-lending targets. Term credit for agriculture is being drastically reduced due to lack of credible data and this is the major reason for lack of agricultural productivity growth in the country. Also, the inexplicable delay in revamping of the Long Term Co-operative Credit Structure (SCARDBs and PCARDBs), as per Vaidyanathan Committee–II recommendations, and the lack of major agricultural programmes to boost productivity, has ensured falling productivity levels, even by Asian standards.

The only initiative to help farmers prepare detailed accounts of their seasonal farming operations on a scientific basis is the E-Kutir model (financed by Intel, USA and Grameen, Bangladesh) being implemented as a robust ICT model , without any subsidy. Many such initiatives are needed! Commercial and intensive agriculture, and not subsistence farming, will enhance the slender margins of farmers while the supply-chain model will help bankers identify gaps in agricultural financing. A review of the agricultural credit systems by GOI/RBI is long overdue. Most farmers suffer from cash-flow management problems with no help from the system.

Perspectives

In India, agriculture is a State subject and unless the State really cares for its farmers and protects small farmers by ensuring better returns, the future of all farmers continues to remain bleak. Each State must set stiff R&D targets for agricultural universities, laboratories and agricultural scientists, including the KVKs/ATMAs set-up in various districts. Breakthroughs in research are badly needed in oilseeds and pulses production, and in scientific pure-line breeding of dairy animals. Alternate sources of income include animal husbandry and fisheries as a means of risk reduction for all farmers. Better scientific technology, including use of biotechnology, is urgently needed to reduce input costs of farmers and enhance productivity. This will help farmers combat climate change effects with confidence.

K G Karmakar

K G Karmakar, PhD, Distinguished Fellow, SKOCH Development Foundation, was Managing Director of National Bank for Agriculture and Rural Development (NABARD). With over 30 years of professional experience as an executive in various banking and financial institutions such as State Bank of India, Reserve Bank of India and NABARD, Dr Karmakar has specialised in agriculture/rural credit, corporate planning, micro-credit, project management and rural infrastructure development. He has many publications to his credit such as: Agricultural Project Management for Bankers; Rural Credit and Self-Help Groups and Microfinance in India. He has published more than 60 articles related to rural credit and rural development, some of which has been presented in national and international seminars.
Back to top button